Should I take Social Security Early if the Trust Fund May Be Depleted by 2032?
One of the most common questions I hear from people approaching retirement is some version of this:
“Should I start taking Social Security as soon as possible because the program is running out of money?”
It is an understandable concern. The 2026 Social Security Trustees Report projects that the Old-Age and Survivors Insurance (OASI) Trust Fund, which pays retirement and survivor benefits, will deplete its reserves in the fourth quarter of 2032. If Congress made no changes to the program, incoming revenue would be sufficient to pay approximately 78% of scheduled benefits at that point.
That certainly deserves our attention. But it does not mean Social Security will be bankrupt in 2032, and I don't believe fear of the trust fund's possible depletion should, on its own, drive your decision about when to claim benefits.
Social Security Is Not Going Away in 2032
First, let's clear up one of the biggest misconceptions about Social Security.
The trust fund is essentially a reserve that supplements the payroll taxes being collected from current workers. Depleting that reserve does not mean Social Security suddenly has no money coming in.
Even if Congress did absolutely nothing, payroll taxes would continue flowing into the system. Under the Trustees' current projections, those revenues would be enough to pay approximately 78% of scheduled OASI benefits when the fund's reserves are depleted.
There is also a separate Disability Insurance trust fund. When the two Social Security trust funds are looked at on a hypothetical combined basis, reserves are projected to last until 2034, at which point approximately 83% of scheduled benefits could still be paid from incoming revenue.
In other words, the issue facing Social Security is a funding shortfall, not the disappearance of the program.
Congress will eventually have to address that shortfall. We don't know exactly what the solution will look like. It could involve higher payroll taxes, changes to the amount of income subject to Social Security taxes, benefit changes, increases in retirement ages, or some combination of these.
What we should not do is build a retirement plan around predicting exactly what Congress will do.
Claiming Early Has a Cost
Suppose you were born in 1960 or later and your full retirement age is 67. If you claim Social Security at 62, your retirement benefit is generally reduced by 30% compared with claiming at 67. That reduction is permanent.
Conversely, delaying Social Security beyond full retirement age increases your benefit. For someone born in 1960 or later, waiting until age 70 produces a benefit equal to approximately 124% of the full-retirement-age benefit.
For example, consider someone whose benefit at age 67 would be $3,000 per month.
Claiming at 62 would reduce that benefit to approximately $2,100 per month. Waiting until 70 would increase it to approximately $3,720 per month.
That's a difference of more than $19,000 per year between claiming at 62 and 70, before considering future cost-of-living adjustments.
So when someone tells me, “I'm going to claim at 62 because I want to get my money before Social Security runs out,” my concern is that they may be making a permanent financial decision based primarily on fear.
What If Benefits Really Are Cut?
This is where retirement planning becomes important.
Rather than assuming benefits will either remain at 100% or disappear entirely, we can stress-test the retirement plan.
For someone retiring today, for example, we might run one projection assuming they receive their currently scheduled Social Security benefit. Then we can run another assuming that benefits are reduced in the future.
Can the retirement plan still succeed? Does the client have enough investment assets and other income to absorb the reduction? Would spending need to change?
That is much more useful than simply guessing what Congress will do.
Ironically, claiming early doesn't necessarily protect you from a future across-the-board benefit reduction. You may simply be locking in a smaller benefit today and potentially still remain exposed to whatever changes Congress eventually makes.
So When Does Claiming Early Make Sense?
There are some situations where claiming Social Security early can make sense.
Someone in poor health with a shorter life expectancy may have good reason to claim earlier. Someone who has retired and needs Social Security to meet basic living expenses may not have the luxury of waiting. The decision can also be different for married couples because we need to consider not only each spouse's retirement benefit but also the potential survivor benefit.
On the other hand, someone in good health with longevity in their family, adequate retirement savings, and a spouse who could eventually depend on their survivor’s benefit may have a strong reason to delay.
That's why I don't believe in a universal “best age” to claim Social Security.
Don't Let Fear Make the Decision
Proverbs 21:5 tells us,
“The plans of the diligent lead surely to abundance, but everyone who is hasty comes only to poverty.”
I think there is an important financial-planning principle in that verse. We cannot know what Congress will do with Social Security over the next several years. But uncertainty shouldn't cause us to make a hasty decision out of fear.
The Social Security funding problem is real, and I believe retirees should account for it in their financial plans. But “Social Security is going bankrupt, so I should take it at 62” is an oversimplification of a much more complicated decision.
Instead, your claiming strategy should consider your health, life expectancy, marital status, survivor benefits, other retirement income, investment portfolio, taxes, and how Social Security fits into your overall retirement income plan.
Social Security shouldn't be viewed in isolation.
Before deciding whether to claim at 62, 67, 70, or somewhere in between, ask a better question:
“Which Social Security strategy gives my family the best chance of accomplishing our retirement goals—even if the Social Security system changes?”
That's the question a good retirement plan should help you answer. Especially if you are married, or have been married, and one spouse's benefit is much higher than the other. This is where you need the most planning.
If you have additional questions on when to claim social security, feel free to reach out to us at info@arkalliancefinancial.com or book a free consultation using the scheduling link below:
This article is for educational purposes only and should not be considered individualized financial or tax advice.
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